Senator Lott Calls for Hearings on Chinese Penetration of the Panama Canal Zone

(Washington, D.C.): As the clock inexorably runs on the United States’ completion of its
withdrawal from the bases that control the Panama Canal, the risks associated with such a step
are both growing and becoming a matter of increasing concern in Washington. Of particular
concern are the confluence of the intensifying conflict in neighboring Colombia and the
long-term lease of key facilities on both ends of the “path between the seas” to Communist
Chinese
entities. According to a former Chairman of the Joint Chiefs of Staff and Chief of Naval
Operations, Admiral Thomas H. Moorer (USN, Ret.):

“A company called Panama Ports Company, S.A., affiliated with Hutchinson
Whampoa, Ltd. through its owner, Mr. Li Ka-Shing, currently maintains control of
four of the Panama Canal’s major ports….Panama Port Company is 10 percent owned
by China Resources Enterprise, the commercial arm of China’s Ministry of Trade and
Economic Cooperation.”

Senator Fred Thompson (R-TN) has called China Resources Enterprise “an agent of
espionage — economic, military, and political — for China.” He also has observed that CRE has
“geopolitical purposes. Kind of like a smiling tiger; it might look friendly, but it’s very
dangerous.” The same might be said of Li Ka-Shing, who has been closely linked with the
Chinese government, including the People’s Liberation Army and intelligence services.

So great is the unease about Chinese penetration of the Western hemisphere’s most strategic
waterway that the Senate Majority Leader yesterday formally requested that the Senate Armed
Services Committee assess this situation and its implications for U.S. national security and
economic equities. Excerpts of Senator Lott’s wise tasking letter follow (emphasis added):

The Honorable John W. Warner
United States Senate
225 Russell Senate Office Building
Washington, D.C. 20510

Dear John:

…In [an August letter to Secretary of Defense William Cohen], I raised questions regarding
Hutchison-Whampoa, a company with reported Chinese military and intelligence ties, and its
control of port facilities at either end of the Canal. To date, I have not received a response to my
letter from Secretary Cohen.

The turnover of the Panama Canal is a very divisive and controversial issue of its own
accord.
The Canal is strategically important; one-third of the world’s shipping passes through its
waters. Unimpeded commercial and military passage through the Canal is of primary
importance to the United States, its number one user.

It is the perception of some of my colleagues and I that the Chinese involvement in Panama
may
not be straightforward and could, in fact, be a threat to our national security.
One example
would be the apparent rights to former U.S. installations won by the Chinese in a perceived
“disputed competition bid” for these facilities. My interest is to learn the facts associated with
the Panama Canal transfer.

I would appreciate greatly your committee, as part of your hearings this fall, reviewing this
critical national security issue. Some questions that I feel deserve attention are:

1. What powers does Panama Law No. 5 give Hutchison Whampoa in controlling,
   influencing and running the Panama Canal? Could these powers be used to limit or
   hinder U.S. military or commercial traffic transiting the Canal?
2. What are the national security risks of Hutchison Whampoa controlling container
   facilities in the Balboa and Cristobal ports? What are that national security risks of
   Hutchison Whampoa eventually controlling former U.S. military bases in Panama?
3. Does Hutchison Whampoa or its Chairman, Li Ka-shing, have ties to the Chinese
   Communist Party, the People’s Liberation Army, or Chinese intelligence activities?
4. Does the 1977 treaty ensure that the United States can intervene, militarily if necessary,
   to keep the Panama Canal open? What options short of direct military intervention are
   available to the U.S. to ensure the safe, timely transit of U.S. military and commercial
   traffic through the Canal?
5. Is China purchasing the leverage of a “blue water Navy” by commercial control of the
   Panama Canal? How might this asymmetric response impact our Western Pacific
   doctrine, particularly regarding Japan, Korea, and Taiwan?

I appreciate greatly your considering this request. The transfer of control of the
Panama
Canal is one of the critical national security issues currently facing our Nation, and its
impact will be felt for many generations to come.

* * *

Again, thank you for your attention to this issue. With very best wishes, I am

Sincerely yours,

Trent Lott